Orkuveita Reykjavíkur - Financial Statement Release

Improved financial results for Orkuveita Reykjavikur

The strengthening of the Icelandic krona and decreasing financial cost ensured
that the operation of Orkuveita Reykjavikur (OR) returned a ISK 16.8 billion
profit for the first nine months of 2010. Total debts are considerable, or
approx. ISK 229 billion but have decreased by ISK 12.3 billion from the
beginning of the year. Total assets amount to ISK 286 billion and the equity
ratio therefore 20.1%. The interim financial statements were approved at a
board meeting today. 

The Icelandic krona has strengthened by 11.5% during the first nine months of
the year. OR paid ISK 1.5 billion interest during the first nine months of
2010. The corresponding amount in 2009 amounted to ISK 4.1 billion. Interest
expense decreases by two thirds between the periods, or ISK 2.6 billion. The
reason for this is that OR had to finance itself partly in the Icelandic market
in the year 2009, where interest rates are more than tenfold that of the
average foreign interest rates of OR loans, which are 1.01%. 

OR´s EBITDA for the first nine months of 2010 amounted to ISK 9.9 billion.
Profit before income tax amounted to ISK 22.4 billion. Calculated income taxes
amount to ISK 5.6 billion resulting in a profit of ISK 16.8 billion. 
Orkuveita Reykjavikur's interim financial statements are in accordance with
international financial reporting standards as adopted by the EU. 

Helgi Þór Ingason, CEO of OR:
“This improvement in performance is very positive and we are working to
progress in this area. Accounting earnings are still largely dependent on
favourable external conditions such as exchange rate increases and higher
aluminium prices. The various measures determined during late summer, involving
streamlining operations and increasing revenues were launched in the autumn and
have yet to be reflected in the company´s financial statements. I trust that
company operations will inspire the confidence which is needed to achieve
feasible financing. Performance improvements are still in the most part
calculated earnings.  We are working closely with the company's owners and
Icelandic and overseas financial institutions to ensure liquidity next year.
This is still our most pressing financial challenge.” 
Main highlights of the first nine months of 2010

Orkuveita Reykjavikur´s operations returned a profit of ISK 16.794 million for
the first nine months of 2010. Operations in the corresponding period of 2009
resulted in a loss of ISK 11.288 million. 
Operating revenues for the first nine months of the year amounted to ISK 19.445
million. Operating revenues in the corresponding period of 2009 amounted to ISK
17.960 million. 

EBITDA of the Company for the first nine months of 2010 was ISK 9.886 million
and ISK 8.526 million in the corresponding period of 2009. 

Financial income and expenses were positive for the first nine months of 2010
and amounted to ISK 18.395 million. The corresponding amount for 2009 was
negative by ISK 15.173 million. 
Total assets 30 September 2010 were ISK 286.030 million and were ISK 281.526
million at year-end 2009. 
Equity of the Company 30 September 2010 was ISK 57.446 million and was ISK
40.657 million at year-end 2009. 
Total liabilities of the Company 30 September 2010 were ISK 228.583 million
compared to ISK 240.868 million at year-end 2009. 
The equity ratio was 20.1% as at 30 September 2010 compared to 14.4% at
year-end 2009. 


Other issues and prospects

The Board of Directors at Orkuveita Reykjavíkur have secured the income stream
of the Company by a strategic charge setting and curtailing in OR´s operations.
The results are partly apparent in the interim financial statements but will
become fully apparent in the last quarter of 2010 and will strengthen the cash
flow and improved ability to meet obligations. 

The Company continues to work on the enlargement of the power plant at
Hellisheiði. The Company intends to commission the plant's 4th phase, 
hot-water production, later this year, and the 5th phase, production of 90 MW
electricity, in the latter half of 2011. OR signed a loan agreement with the
European Investment Bank for financing half of the 5th phase cost of the power
plant at Hellisheiði. Discussions for more financing for OR are ongoing. 

For further information contact Helgi Þór Ingason, CEO Orkuveita Reykjavikur,
tel.: +354 516 6000

Attachments:

orkuveita reykjavíkur - interim financial statements_30.9.2010.pdf